Coronation’s annual results reflect a tough year on the markets; Company is positive on current portfolio positions
22 November 2022
Cape Town, 22 November 2022: Long-term valuation-driven asset manager Coronation Fund Managers today announced its annual results for the financial year ended 30 September 2022.
- Assets under management: R574 billion
- Fund management earnings per share: 387 cents
- Final dividend per share: 172 cents
After a very strong recovery from the Covid lows in early 2020, global equity markets collapsed in 2022. Most asset classes declined precipitously as markets digested an unrelenting series of negative developments. Inflation, which soared to levels not seen in recent decades, and a dramatic increase in interest rates to curb it are likely to cause significant economic damage in the years to come.
Says CEO Anton Pillay, “Fund management companies are cyclical businesses that are heavily impacted by market movements. Our financial results for the period under review reflect the sharp declines seen across all asset classes globally.
“In this challenging market environment, we experienced outflows representing 6% of our average assets under management (AUM). This is in line with our expectations and it reflects the realities of a shrinking domestic savings pool. As a large domestic manager, we expect Coronation’s flows to broadly reflect that of the South African savings pool and the economic reality within which it operates. Recent changes to Regulation 28 will further shrink the available pool of domestically managed assets. “
For the period under review, average AUM was R621 billion, which is marginally higher than that of the previous year (September 2021: R617 billion). Closing AUM is 9% lower at R574 billion (September 2021: R634 billion). Reflecting the extreme volatility currently in markets, AUM as at 15 November 2022 has recovered to R610 billion.
In spite of tough operating environment, total expenses were significantly down by 12% from the previous reporting period, Pillay explains, “This is a significant decline considering the current inflationary environment and is the result of our continued focus on managing fixed expenses, which were marginally up by 2%, and our variable expenditure model that has shielded shareholders from the extreme cost pressures that businesses around the world are currently experiencing. It is also worth noting that we continue to invest in the business to ensure that we are able to offer our clients world-class service in an ever-evolving landscape,”
Fund management earnings per share (FMEPS) for the year ended 30 September 2022 decreased by 18% to 387.0 cents. This compares to 470.9 cents in the previous year. FMEPS is used by management to measure true operating financial performance for the period. FMEPS excludes the net mark-to-market impact of fair value gains and losses and related foreign exchange movements on our investments held for seeding products. Diluted and basic headline earnings per share decreased by 25% to 366.3 cents (September 2021: 487.9 cents).
In 2023, the Company will celebrate its 30th anniversary. Our long-term investment track record over that period remains exemplary. Over the past three decades, 96% of our portfolios have outperformed their benchmarks.*
Business update and corporate citizenship
“We remain an active corporate citizen and are committed to contributing to an inclusive economy and a prosperous society. This year, we are proud to have been recognised for our continued efforts in the transformation and sustainability arenas, and we placed first for our gender reporting in Accenture’s Gender Mainstreaming Awards and for our stewardship disclosure in the International Corporate Governance Network’s annual Global Stewardship Disclosure Awards,” says Pillay.
During the period under review, we continued to support education and training initiatives via our CSI and enterprise development programmes, and sharpened our focus on hunger relief initiatives in partnership with FoodForward SA and Ladles of Love.
Coronation is also an active participant in industry and government-related engagements to find solutions to reduce unemployment, improve the available skillset, kickstart growth and place South Africa on the road to economic recovery.
We have been active stewards of our clients’ capital for almost 30 years and fully integrate environmental, social and governance considerations into our investment and business processes. Our 2021 Stewardship Report (available on www.coronation.com) details our stewardship activities for that calendar year, including our position on climate change and the carbon emissions of our key equity portfolios. We continue to encourage companies to adopt the Taskforce for Climate-Related Financial Disclosure (TCFD) when reporting on climate risks in their businesses. We fully support the move to a greener, more sustainable and equitable world and will continue in our endeavours to engage on these matters. We are a participating investor in Climate Action 100+.
Coronation itself has fully committed to applying the TCFD framework when reporting on our business operations. We will publish our third carbon footprint assessment later this year, along with our first Sustainability Report.
Transformation and empowerment
Coronation is a Level 1 contributor to broad-based black economic empowerment, is 29% black owned and R269 billion, representing 47% of our total AUM, is managed by black investment professionals. Achieving a Level 1 rating is the result of years of dedication to meaningful and substantive broad-based transformation via our recruitment, enterprise development, procurement, and training and development initiatives. “
Pillay notes that transformation has been a key focus at Coronation since it opened its doors in 1993, “Our commitment to diversity is demonstrated by our diverse employee complement, with key senior leadership positions occupied by black individuals (three of whom are women). This includes our CEO, CFO, COO, Head of Institutional Business, Head of Fixed Interest, Head of Core Equity and Head of Absolute Return.”
Of our South Africa-based employees:
- 51% are women;
- 63% are black, of whom 58% are black women;
- 86% of new appointees during the 2022 financial year are black; and
- 80% of our Board of Directors are black and 50% are women.
Looking ahead, Pillay is deeply concerned by the plethora of challenges that economies and societies around the world will need to navigate in the years ahead and the consequent impact on people's ability to save. However, he is positive about the future prospects for client portfolios, “The steep, and often indiscriminate, sell-off in markets has created multiple opportunities for patient long-term investors.
“We have taken full advantage of these opportunities and are very optimistic about the long-term prospects for our client portfolios. As an investment-led business, our primary focus remains growing the value of the client assets entrusted to us over the long term, rather than simply looking to grow the pool of assets under our management.”
In the competitive fund management industry, our ability to consistently deliver outperformance, at scale, and over multi-decade periods is a significant differentiator. Our highly experienced and well-resourced investment team continues to employ the same long-term investment approach that has driven outperformance across a significant portion of our fund range for nearly three decades. We will continue to manage the business to deliver long-term value to our clients, shareholders and other stakeholders.
Analyst enquiries: Johannes van Niekerk, CapitalVoice
082 921 9110
Media enquiries: Fiona Kalk, Coronation
021 680 2584
Any information being provided herein (the “Information”) is not designed for use in any jurisdiction or location where the publication or availability of the Information would be contrary to local law or regulation. If you have access to the Information, it is your responsibility to be aware of and to observe all applicable laws and regulations of any relevant jurisdiction and it is recommended an investor first obtain appropriate legal, tax, investment or other professional advice prior to acting upon the Information. Coronation Asset Management (Pty) Limited, Coronation Investment Management International (Pty) Limited and Coronation Alternative Investment Managers (Pty) Limited are authorised Financial Services Providers regulated by the Financial Sector Conduct Authority of South Africa. Coronation Asset Management (Pty) Limited, Coronation Investment Management International (Pty) Limited and Coronation Alternative Investment Managers (Pty) Limited are subsidiary companies of Coronation Fund Managers Ltd, a company incorporated in South Africa and listed on the JSE (ISIN: ZAE000047353). The Information is for information purposes only and does not constitute or form part of any offer to the public to issue or sell, or any solicitation of any offer to subscribe for or purchase an investment, nor shall it or the fact of its distribution form the basis of, or be relied upon in connection with, any contract for investment. Unit trusts should be considered a medium- to long term investment. The value of units may go down as well as up, and is therefore not guaranteed. Past performance is not necessarily an indication of future performance. Note that individual investor performance may differ as a result of the actual investment date, the date of reinvestment of distributions and dividend withholding tax, where applicable. Where foreign securities are included in a fund it may be exposed to macroeconomic, settlement, political, tax, reporting or illiquidity risk factors that may be different to similar investments in the South African markets. Fluctuations or movements in exchange rates may cause the value of underlying investments to go up or down. Coronation Management Company (RF) (Pty) Ltd is a Collective Investment Schemes Manager approved by the Financial Sector Conduct Authority in terms of the Collective Investment Schemes Control Act. Unit trusts are traded at ruling prices set on every trading day. Unit trusts are allowed to engage in scrip lending and borrowing. Coronation Fund Managers Limited is a Full member of the Association for Savings & Investment SA (ASISA). Opinions expressed in this document may be changed without notice at any time after publication. Nothing in this document shall constitute advice on the merits of buying and selling an investment. Coronation Life
Assurance Company Limited is a licensed insurer under the Insurance Act, No.18 of 2017.